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BHP Billiton and Baosteel Ink Long-Term Iron Ore Supply Agreement
01/31/2008 - BHP has signed an agreement to supply Baoshan Iron & Steel Co., Ltd. with an additional 10 million tonnes of iron ore per year for the next 10 years, with shipments beginning in April 2008.
BHP has signed an agreement to supply Baoshan Iron & Steel Co., Ltd. with an additional 94 million tonnes of iron ore. BHP is supported in the supply agreement by its joint venture partners, Itochu Minerals & Energy of Australia Pty Ltd, Mitsui-Itochu Iron Pty Ltd, and Mitsui Iron Ore Corp. Pty Ltd.
Under the new contract, Baosteel will be supplied with 10 million tonnes of iron ore each year for 10 years at a price that will be mutually agreed upon each year. The first shipment under the new contract is scheduled for April 2008.
BHP Billiton President Marketing, Tom Schutte, said the agreement underlined BHP Billiton's long-term commitment to Baosteel. "Baosteel plays a significant role in China’s steelmaking industry. We are absolutely delighted to be able to support Baosteel’s future development by guaranteeing a stable and predictable supply of iron ore.
"This is a significant quantity of iron ore and highlights our interest in keeping pace with high demand in China during a time when supply is tight,” continued Schutte. “We are doing this through substantial investment in the expansion of our mine, rail and port operations in Western Australia, with planned installed production capacity of 300 million tonnes per annum by 2015".
BHP Billiton has been a long-time partner to Baosteel through the supply of a range of carbon steel materials products, including iron ore, manganese and coking coal. The company also supplies nickel for Baosteel’s expanding stainless steel production. In 2005, the two companies also entered into an agreement that focuses on technical research in iron ore and steel making raw materials.
"We are pleased to enter into this iron ore supply contract with BHP Billiton,” said Baosteel Vice President, Dai Zhihao. “This will enhance the long-term cooperation between Baosteel and BHP Billiton based on mutual interest. The new supply highlights our optimism about the long-term prospects for the steel industry in China."
The additional supply is in line with the growth of BHP Billiton’s iron ore production. It is the result of extensive planning and discussions between the two companies over the past two years.
Baosteel is a leading steelmaker in China.
BHP Billiton holds an 85% share in the joint venture with Itochu Minerals & Energy of Australia Pty Ltd, Mitsui-Itochu Iron Pty Ltd, and Mitsui Iron Ore Corp. Pty Ltd.
